Wednesday, June 13, 2007

Bill would cut movie studio tax credit

BATON ROUGE (AP) - Building a movie studio in Louisiana is about to get far less lucrative for projects not already under way, if a bill before the Legislature becomes law.

A House bill awaiting a vote on the House floor as soon as today, would keep a 40 percent tax credit in place for movie studio construction.

But future projects would be capped at $25 million in total tax credits.

Existing projects would be grandfathered, but they would have to qualify for an unlimited 40 percent tax credit only through the end of this year and 25 percent thereafter.

The changes were proposed by the state's Department of Economic Development after concerns were raised by the Division of Administration.

The state's financial officers found a potential $1.5 billion loss in tax revenue if the uncapped 40 percent tax credit stayed in place.

No significant changes are aimed at movie production tax credits, which are now 25 percent and are scheduled to drop to 20 percent in 2010 and 15 percent in 2012.

The bill is being considered by the Legislature as LIFT Incorporated – which obtained 2006 tax credit approval on a $185 million studio in New Orleans – saw its offices raided early this month by the FBI.

That investigation followed a whistleblower lawsuit alleging a former state film official, Mark Smith, granted LIFT favorable treatment in exchange for kickbacks.